The Next Waive

Potential Visa Waiver Could Increase Korean Visitors Five-Fol

January, 2008

Why South Koreans need a visa to travel to the United States is a mystery to Austin Kang, co-chair of Hawaii’s Korean Visa Waiver Committee. Canada lifted its visa restriction in 1994, and in two years, South Korean arrivals jumped 79 percent. Japan got rid of its visa policy in 2005, and today, more Koreans visit Japan than the other way around. Hong Kong and Taiwan do not require visas, and Australia’s visa-approval process is fast and free.

U.S. visas, on the other hand, are labor-intensive. Koreans are required to pay a $120 visa-application fee; then they must visit the U.S. embassy in Seoul for a face-to-face interview. Oh, and good luck getting approved. The odds are in favor of employed, married, educated applicants. No wonder only 7.5 percent of Korea’s 10 million outbound travelers choose the U.S. as their destination. Last year, 40,000 Koreans visited Hawaii, down from pre-Sept. 11 levels of 123,000. “We really want visa waivers. It is our hope,” says Kang, co-chair of Hawaii’s Korean Visa Waiver Committee.

That could happen as early as next January, thanks to a measure passed by the U.S. Congress last August that admits up to 12 countries into the U.S. Visa Waiver Program (see sidebar on page 29). The biggest challenge to getting a visa waiver is a country’s “refusal rate,” the annual percentage of rejected visas. Industry leaders say Korea is a shoo-in for the program, due to its low 3.5-percent refusal rate and strong bond with the U.S.

The Korean government does not want to miss the boat and is working hard this year to meet U.S. standards for biometric passports and other security measures. Hawaii’s tourism industry also wants to be part of the action, despite concerns about readiness. If Korea is approved, the U.S. could expect at least 1.45 million visitors in the first year, according to the U.S. Department of Commerce. Hawaii could expect more than 200,000 in the same period.

“We’ve been working on this for a very long time,” says Marsha Wienert, Hawaii’s tourism liaison. “Because Korea and Hawaii are so close, we see that it could be the next country that could benefit us where tourism and business is concerned.”

South Korea Facts

22.3 – Percent of population that travels abroad

11.6 mil. – Number of overseas travelers in 2006

758,000 – Number of arrivals to the U.S. in 2006

5 Rank in overseas arrivals to the U.S. from 2005 and
2007. France ranks No. 4, and Australia ranks No. 6

25 Number of vacation days per year per worker

7th Rank in the world for the highest number of vacation days

90 Percent of households connected to the Internet

93,728 Number of South Korean students living in the U.S.

1st Rank for the number of foreign students living in the
U.S. India and China are No. 2 and 3, respectively

2 mil. Population of Korean Americans living in the U.S.

Congress’ proposal couldn’t come at a better time. The U.S. is fast losing market share of international visitors, particularly from Europe and Asia. Foreign arrivals to the U.S. were down 6.1 percent in 2005 from 9.4 percent in 1992, according to the U.S. Department of Commerce.

Congress’ approval also comes four months after the U.S. and Korea signed the KORUS FTA, a free-trade agreement that boosts economic ties between the two countries. It will be the third-largest free-trade area after the EU and NAFTA.

To slow down the Korean won’s appreciation against the U.S. dollar, the South Korean government last year increased the cap on overseas real estate investments from $1 million to $3 million per person. There are plans to lift all monetary restrictions on overseas investments in the next few years. “When that happens, we’ll see more Koreans buying homes, real estate and investing in business,” says Gina Kim Nakamura, president of the Hawaii Korean Chamber of Commerce and Bank of Hawaii’s vice president of international banking. Her clients include high-net-worth individuals from South Korea.

Off the top of her head, she lists several Korean companies wanting to invest in Hawaii: one plans to develop luxury condominiums with high-tech amenities in the Kapiolani area of Honolulu; another has its eye on boutique hotels in Waikiki; a third company wants to build a shopping and entertainment complex near Keeaumoku Street in Honolulu. “A lot of Korean businesses will come if they lift visa restrictions. I’d like to see more Korean investors here,” she says.

The visa waiver is a mixed blessing for James Chang, chief executive officer for HK International Inc., one of Hawaii’s largest Korean tour companies. His first-floor office, dwarfed by high-rise Waikiki hotels, is testament to the ups and downs of Korea’s visitor industry since 1996. On good months, Chang’s company hosted as many as 2,000 Korean visitors, mainly corporate incentive travelers. But there were times when customers weren’t interested in his company’s popular, four-night Neighbor Island honeymoon package. “I’m concerned that when we start the visa-waiver program, Hawaii’s tour operators will [eliminate] each other because we will try to cut down the competition,” Chang says. Of the 40 registered Korean tour operators in Hawaii, one-third is active, he says.

South Korean Top Destinations

COUNTRY

NUMBER OF TRAVELERS

AVERAGE GROWTH (1999-2005)

VISA REQUIRED?

China

3,923,986

44%

Yes ($20 fee, 24-hour process)

Japan

2,117,146

11%

No

Thailand

1,092,721

24%

No

USA

757,721

12%

Yes ($120 fee, seven- to 30-day process)

Hong Kong

700,278

17%

No

Philippines

481,397

57%

No

Singapore

454,661

11%

No

Vietnam

317,213

132%

No

Australia

260,900

17%

Yes (free)

Taiwan

196,260

22%

No

Already the visa waiver is affecting his tour company. Some Korean travelers postponed their trips to Hawaii last fall after Congress announced the visa-waiver measure in August. Chang said travelers did not want to stand in line at the U.S. embassy in Seoul for visas; they rather would wait until the visa restriction is lifted in 2009 to visit Hawaii. Last November, Chang’s company was scheduled to host between 700 to 800 customers; instead, it saw less than half.

Mark Sim, a radio show host on Korean station KREA 1540AM, hears similar concerns from his listeners. If – for whatever reason beyond Korea’s control – the U.S. decides not to issue the visa waiver to Korea in 2009, “it’s really going to hurt our tourism industry if it doesn’t go through,” Sim says.

MARK SIM, a radio show host on KREA 1540 AM, discusses topics pertaining to the Korean community in Hawaii. Sim once owned a Honolulu video-production company but called it quits in 1998, after the Asian economic crisis caused Korean visitor arrivals to fall. photo: rae huo

In the mid-1990s, Sim owned a popular video company that documented Korean visitors to Hawaii. “We taped their faces and scenic shots, and we did interviews at their requests,” he recalls. His team edited the footage and delivered souvenir tapes to hotels before customers left for the airport. “They wouldn’t buy our stuff now. Even grandmothers have digital cameras,” he laughs. What appealed to Koreans a decade ago wouldn’t work today.

Sim and Chang still have bad memories of 1998, the worst year in Korea’s financial history. The International Monetary Fund bailed out the country’s debt-ridden conglomerates, or chaebol, in a $60 billion economic rescue package. Korean visitor arrivals to Hawaii that year plunged 500 percent from a record high of 123,000 in 1996 and fell again after Sept. 11. Chang temporarily closed his company and paid off his debts. Sim folded his video production and opened a karaoke bar. Not all of their colleagues stayed in the industry. “A lot of ex-tour guides are in the taxi business,” Sim says.

It’s been 10 years since the IMF’s bailout. That only means one thing: “Korean travelers had all these years to see the world and become more internationalized,” says Ted Sturdivant of Sturdivant Publishing, which distributes Hawaii The Islands of Aloha, Hawaii’s Official international Travel Guide in multiple languages. Because Koreans have seen other destinations, they will not tolerate poor service. Hawaii had better be ready to cater to Koreans, he says. Sturdivant and his colleagues at Academia Language School have created a Korean program for Hawaii’s visitor industry. The curriculum was designed to “prevent potential problems and misunderstandings that affected Japanese visitors when they first began to visit our state,” he says. It includes basic language, cultural and history lessons.

Similar efforts are being made with Hawaii’s colleges and tourism officials in Korea “to upgrade the quality of Hawaii Korean tour guides,” says Julia Koo, public relations and marketing manager for Hawaii Tourism Korea in Seoul. Her office recently kicked off an Aloha Incentive Group program to ease the visa process for meetings and incentive groups. The program is similar to the Aloha Honeymoon promotion created two years ago to help newlyweds . Next spring, Hawaii Tourism Korea is scheduling a trade mission in Busan, Korea’s second-largest city, to introduce Hawaii vendors to the industry. “We’re conducting all kinds PR activities to promote Hawaii in Korea,” Koo says.

Austin Kang of the visa waiver committee is aware of everyone’s efforts – and concerns – about the anticipated arrival of 200,000 Korean visitors to Hawaii. Committee members are assembling travel-information booklets to help Koreans “cope with possible mistakes when they travel without a visa” next year, Kang says. They hope to distribute the booklets not just in Hawaii, but throughout the U.S.

So badly does Kang wants Koreans to travel freely that he even composed “The Visa Waiver Song.” It is dedicated to the thousands of Korean laborers who, ironically, made Hawaii their home more than a century ago.

Visa Waivers: how they work

In 1986, the U.S. Congress created the Visa Waiver Program, allowing residents of select countries to visit the U.S. for business or pleasure for up to 90 days without an official visa-application process. The program has been tweaked in the past 20 years. For instance, foreign travelers now must have machine-readable passports with biometric information. These “e-passports” allow immigration officials to view a person’s biographical information. Visa-waived countries also must undergo periodic reviews to ensure their status with the U.S.
The following 27 countries participate in the Visa Waiver Program.

Andorra

Australia

Austria

Belgium

Brunei

Denmark

Finland

France

Germany

Iceland

Ireland

Italy

Japan

Liechtenstein

Luxembourg

Monaco

Netherlands

New Zealand

Norway

Portugal

San Marino

Singapore

Slovenia

Spain

Sweden

Switzerland

United Kingdom

The list soon may grow. Last August, President George Bush signed the Improving America’s Security Act of 2007, expanding the program to 12 more countries: South Korea, Taiwan, Argentina, Brazil, Cyprus, the Czech Republic, Estonia, Greece, Israel, Malta, Slovakia and Uruguay.

The bill, however, doesn’t automatically admit all 12 countries. The biggest challenge to visa-waiver status is a country’s “refusal rate,” or the annual percent of rejected visa applications. By law, refusal rates must be less than 10 percent (the Aug. 3 bill raised the threshold from 3 percent to 10 percent). Visa-waived countries also must agree to cooperate with the U.S. on counter-terrorism and other measures. Which of the 12 countries will join the program has yet to be determined. Korea, with its 3 percent refusal rate, ranks high on the list.

Meanwhile, the Homeland Security Department is upgrading its systems. All foreigners by the end of 2008 – regardless of visa status – will be required to provide 10 fingerprints when they arrive at U.S. immigration checkpoints. In the past, only index-finger scans were needed. The new program, known as US-VISIT, is part of a $1.7 billion effort to help federal agents spot faux passports and track illegal aliens and terrorists.

Washington Dulles International Airport in Virginia was the first airport to implement 10-finger scans last December, followed by nine other metropolitan airports. Honolulu International Airport was not on the list. “We’re in a holding pattern,” says Marsha Wienert, Hawaii tourism liaison. “As of right now, we have no direction from Homeland Security on what we’re supposed to do.”